00:00 Lou
It’s useful to compare it to the dot-com era, but if you take the valuations and waiting periods of the top three stocks in the S&P 500 index during the dot-com era and compare them to the top three stocks today, they traded at forward P/E ratios of 62 times versus 31 times. In other words, if this is a bubble, it is not yet a bubble and has not yet finished expanding. I just don’t think we’re there. We’re seeing incredible revenue growth supporting this AI trend that we haven’t seen since the dot-com era.
00:27 Speaker B
Lou, what do you think about this recent disagreement? Nvidia has been under pressure recently, and Alphabet has been on the rise since then. Is there something to read there?
00:37 Lou
Well, I love that because I think Alphabet has been left for dead for far too long. In fact, I was late to Nvidia. I own both stocks and it was really a big deal at Alphabet. In other words, the P/E ratio at the beginning of the year was 21 times, and now it is 29 times. I think we could get to the point where we’ve seen Nvidia 33 or 34 times. Again, I think the biggest lesson is that this is not a zero-sum game. It’s not an Nvidia or Alphabet chip, and it is. Meta intends to use both. Computing demands are too high to initiate switching between chips. Well, we’re not at that stage of the growth cycle yet.
01:05 Speaker B
Lou, I appreciate you coming out and saying, “Look, I didn’t buy Nvidia in 2013.” That’s the type of candor. I also appreciate the transparency of the opening bid. And Google and Alphabet suddenly became some of the hottest stocks on the market.
01:21 ines
Yes, we’re talking about the hottest Mag 7 on the market. They’re firing on all cylinders with TPU, erm, Gemini, which has improved a lot in recent months. And you have Waymo too. I know you don’t talk about it a lot, but I think it would be huge if it were to happen.
01:40 Speaker B
I won’t talk about that, Ines, because I don’t drive these cars. Like me, I’m not there yet. You will learn the technology. I’m not going to put myself in these products that don’t have drivers in them.
01:49 ines
It’ll get there and they’re way ahead of the game. Just because we live on the east coast, but let’s be honest, this is going to be a pain. So, uh, uh, so, uh, that’s impressive. It’s very impressive that Nvidia issued a statement congratulating Google on the inclusion of that chip. There you will find statements about its success. It would be interesting to see Nvidia do something about this, and even address short sellers and such. Nvidia sees itself as a global market leader on the world stage, and I think that raises questions about competition, depreciation cycles, circular financing, etc. And Nvidia is now looking to address some of these concerns in some way.
